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This article begins by surveying some macro-level evidence of the importance of banks for start-up activity. Then, because household financial decisions are intertwined with entrepreneurial financing decisions, the article provides a framework for delineating different types of entrepreneurial financing decisions. After this it considers evidence gleaned from the Panel Study of Entrepreneurial Dynamics, a multiwave panel of nascent entrepreneurs and the businesses they start. Evidence from the Kauffman Firm Survey, a multiwave panel of firms that were started in 2004, follows. The remainder...

This article begins by surveying some macro-level evidence of the importance of banks for start-up activity. Then, because household financial decisions are intertwined with entrepreneurial financing decisions, the article provides a framework for delineating different types of entrepreneurial financing decisions. After this it considers evidence gleaned from the Panel Study of Entrepreneurial Dynamics, a multiwave panel of nascent entrepreneurs and the businesses they start. Evidence from the Kauffman Firm Survey, a multiwave panel of firms that were started in 2004, follows. The remainder of the article considers additional sources of evidence and concludes with a discussion of the policy relevance of the importance of debt.